Setback as MPs kill crucial Bill

IN an unprecedented move, the country’s opposition went on a frenzy after mutilating crucial amendments to the taxation measures proposed by Finance Minister Amos Kimunya that could result into a projected revenue loss of Sh 300 million from the current budget.

The lawmakers, furious with Kimunya’s alleged arrogance and lack of consultation were on the war path to humiliate the government by throwing out key tax measures proposed in the Finance Bill 2006 with far reaching implications to the country’s economy.

As a result, the country may record a revenue loss of nearly Sh 300 million that had already been factored in this year’s budget. Kimunya will have to go back to the drawing board to seek alternative measures to raise this amount to sustain his budget.

The rejected tax proposals in the Amendments to the Bill were Alcohol tax, Capital Gains Tax, Constitutional Office Holders Tax, Sugar Industry Levy tax, Political Party Donation tax, the Insurance Industry Tax, Taxation on Banks with branches abroad and amendments to the Central Bank of Kenya to create an office of Chairman.

They rejected tax proposals outlined by the minister during his budget speech that was hailed by all and sundry as pro-poor, which was aimed at seeking the approval of taxation measures that would have boosted revenue collection in this financial year.

As a result, alcohol brewers have a reason to smile since there will be no increase in taxes from the original 45 percent to the proposed 65 percent on wines, spirits and beer. This will deny Treasury the Sh25 billion that had been included in the budget, taxes that came into effect on July 1 after the minister read his budget.

Legislators in supporting amendments put by finance committee of parliament said the increase in tax on wines and spirits was clearly tailored towards disadvantaging the local industry at the expense of multinational firms that those in government had vested interests in.

Taxation, they argued, should not be used as a tool to kill the local industries or put their competitors at an advantage. The move, is likely to be a breather to consumers of these products since prices were expected to return to where they were before June budget.

Sweet news greeted constitutional office holders when the Opposition rejected thegovernment’s bid to widen the tax net to cover each and every Kenyan when proposals to tax their House and Entertainment allowances were trashed.

This will see judges, the Attorney-General, Controller and Auditor-General and the Electoral Commission of Kenya among others enjoy their hefty parks tax-free.

Those wishing to sell properties like land and houses will rest assured that their proceeds will not be taxed. The MPs said that introducing taxation on property would push them out of reach of the poor who wished to own houses at cheaper prices.

Local banks wishing to open branches in foreign countries too, have a reason to smile following the removal of regulations governing the same that were proposed by Kimunya in the Finance bill that was approved by the house on Thursday and now awaits presidential assent

The opposition also rejected the proposed sugar development levy. Although Kimunya had backtracked on this during debate on the Bill in its second reading, MPs authorised Kenya Revenue Authority to collect the levy from consumers and not farmers.

Kanu and the Liberal Democratic Party (LPP) members rejected a proposal to create the posts of chairman and deputy chairman for the Central Bank of Kenya that was touted to streamline operations and improve on governance.They argued that this was a government move to interfere with the independence of the superior bank and create conflicts of interest between the governor and the chairman– a political appointee of the President.

Kimunya suffered lack of support from the government side with about 20 MPs sitting helplessly as the minister was humiliated forcing him to state at one point that “ it doesn’t matter to me whether you pass them or not” throwing up his hands in desperation. Daniel Khamasi chaired the Committee of the Whole House where this proposals were carried or rejected.

However, despite these, the entire House this week backed Kimunya in approving the Micro Finance Bill through its first reading and commencing the Insurance Amendment Bill 206.

The Micro Finance Bill seeks to create a legal framework to govern operations of over 4,000 micro finance and credit institutions currently operating in Kenya in order to ensure their growth and seal loopholes for phony institutions to fleece Kenyans.

The House at the same time granted leave to nominated MP Dr Julia Ojiambo to introduce Community Social Enterprise Bill that will see the creation of a fund to provide financial support and entrepreneurial skills to rural and urban poor among them women and youths.

It also commenced debate on the Western University of Science and Technology Bill that will see the birth of the country’s seventh public university and increase the level of intake for students seeking university education in Kenya and particularly Western Province where the institution is based.

Parliament also started debate on a private members motion by Ndhiwa MP Orwa Ojode to introduce a bill to amend the Petroleum Act Cap 116 Laws of Kenya to empower the Minister for Energy to fix petroleum prices.

Finally parliament was unanimous in calling for a comprehensive report from internal security minister John Michuki regarding the escalating insecurity, ethnic violence and spate of robberies and car jarkings targeting influential Kenyans.